Nevada-based Tahoe’s shares soared nearly 50 per cent after the deal was announced Wednesday. The company’s shares had been trading near an all-time low and it has been under severe selling pressure from shareholders since last year when it was forced to stop production at its flagship mine in Guatemala after a legal setback.

In July, 2017, the Supreme Court of Guatemala suspended Tahoe’s licence at its Escobal silver mine after ruling local Indigenous populations weren’t adequately consulted before the licence was issued.

On Wednesday, Pan American said it is offering Tahoe shareholders US$3.40 in cash, or 0.2403 Pan American shares, for each of their units, a premium of 54 per cent compared with Tuesday’s close. But, the value of the deal could rise to US$4.10 a share, or roughly US$1.3-billion, if Pan American is successful in getting production restarted at Escobal.

In an interview, Michael Steinmann, chief executive of Pan American, acknowledged the unusual structure of the deal and explained the sweetener is so both Tahoe and Pan American shareholders could share the risk around Escobal.